The Big Four banks, ANZ, Commonwealth, National Australia Bank and Westpac, plus Macquarie Bank were hit by a surprise proposal for a $6.2 billion levy over four years in the federal budget on May 9.
Under the new measures, banks with liabilities of more than $100 billion will be taxed 0.06% on those “liabilities”.
Speculation about a new levy on the big banks sparked a run on banking shares, wiping $14 billion from their market value. Shares in the Big Four banks fell by between 2.1% and 3.6%.
Australian Banking Association CEO and former Queensland Labor Premier Anna Bligh slammed the move and said every Australian will have to pay for the levy. She said there had been no consultation with the industry ahead of the move, adding: “This tax is not a well thought out policy response to a public interest issue; it is a political tax grab to cover a budget black hole.”
Well, she would say that, wouldn’t she?
Some media commentators claim the new bank levy is revenge by the government for the big banks having the temerity to appoint Bligh as their CEO, especially as Treasurer Scott Morrison reportedly had promoted one of his former advisors for the job.
“Cry me a river,” the treasurer reportedly said when quizzed about the banks being upset by the levy. “They make $30 billion in profits [per year] and this is just $1.5 billion out of that.”
Well, you could have knocked me down with a feather. The federal government, which has cut taxes to medium size businesses by $25 billion, and still wants to cut another $25 billion in tax on big business, including the major banks, has smacked down their mates in the banking sector. What is going on?
Much of the answer lies in the mounting public anger at the banks’ bad behaviour in recent years, over exorbitant housing interest rates and credit card charges, incorrect and even fraudulent financial advice given to bank customers, insurance rip-offs, and the general outrage at the banks making massive profits out of the Australian public, especially at a time of economic hardship and austerity.
It seems the government feels the banks are a relatively soft target for a tax rise at a time when they are vulnerable and not in a position to launch a vigorous publicity campaign against the new levy — in contrast to the mining industry's ferocious attack on the Kevin Rudd Labor government’s proposed mining tax five years ago.
Moreover, the government can console themselves with the knowledge that the banks can no doubt recover much of the cost of the levy through manipulation of interest rates and bank charges. Despite its assurance of “close monitoring” of bank behaviour, the government will have trouble controlling their actions under their current limited powers.
Perhaps, in the end, the government is trying to do the Big Banks a favour. It is taking a swipe at the banks as part of a package of limited measures designed to head off the banks’ real nightmare — the prospect of a comprehensive royal commission into the financial sector, which would expose the full extent of their rip-offs of the community.
Nevertheless, the budget plan to impose a tax levy on the Big Banks is a win for the people’s outrage against the sector’s overwhelming greed and super-exploitation of the community. The levy is an attempt by the government to placate public hostility to the Big Four banks and to head off demands for even stronger action.
The banks are considering launching a media campaign claiming the levy will be passed on to customers and small shareholders. This will raise the stakes in the fight against monopoly financial corporations.
We will need a comprehensive solution to the banks’ crimes. This includes nationalising the Big Four, plus Macquarie Bank, under community control and place the massive assets they possess under public ownership. These funds could be used to build public works and to fund public health, education and transport.
And Green Left Weekly needs financial assistance from supporters. If you are able to help, please make a contribution to our fighting fund. You can donate online here.
Direct deposits can also be made to Green Left, Commonwealth Bank, BSB 062-006, Account No. 00901992. Otherwise, you can send a cheque or money order to PO Box 515, Broadway NSW 2007 or donate on the toll-free line at 1800 634 206 (within Australia).
Like the article? Subscribe to Green Left now! You can also like us on Facebook and follow us on Twitter.